Correlation Between Installed Building and Enpro Industries
Can any of the company-specific risk be diversified away by investing in both Installed Building and Enpro Industries at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Installed Building and Enpro Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Installed Building Products and Enpro Industries, you can compare the effects of market volatilities on Installed Building and Enpro Industries and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Installed Building with a short position of Enpro Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Installed Building and Enpro Industries.
Diversification Opportunities for Installed Building and Enpro Industries
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Installed and Enpro is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Installed Building Products and Enpro Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enpro Industries and Installed Building is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Installed Building Products are associated (or correlated) with Enpro Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enpro Industries has no effect on the direction of Installed Building i.e., Installed Building and Enpro Industries go up and down completely randomly.
Pair Corralation between Installed Building and Enpro Industries
Considering the 90-day investment horizon Installed Building Products is expected to generate 1.24 times more return on investment than Enpro Industries. However, Installed Building is 1.24 times more volatile than Enpro Industries. It trades about 0.08 of its potential returns per unit of risk. Enpro Industries is currently generating about 0.06 per unit of risk. If you would invest 8,909 in Installed Building Products on September 3, 2024 and sell it today you would earn a total of 13,505 from holding Installed Building Products or generate 151.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Installed Building Products vs. Enpro Industries
Performance |
| Timeline |
| Installed Building |
| Enpro Industries |
Installed Building and Enpro Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Installed Building and Enpro Industries
The main advantage of trading using opposite Installed Building and Enpro Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Installed Building position performs unexpectedly, Enpro Industries can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Enpro Industries will offset losses from the drop in Enpro Industries' long position.| Installed Building vs. Century Communities | Installed Building vs. MI Homes | Installed Building vs. Taylor Morn Home | Installed Building vs. TRI Pointe Homes |
| Enpro Industries vs. Helios Technologies | Enpro Industries vs. Omega Flex | Enpro Industries vs. Luxfer Holdings PLC | Enpro Industries vs. Hurco Companies |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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